Play It Again Parent Q3 Sales Up; Net Slips

Winmark Corporation posted net revenues of $7.2 million for the third quarter, an increase of 15.1% over the $6.3 million reported during the same quarter last year. Net income for the third quarter was $838,200, or 14 cents per share diluted, down 9.5% from $926,100, or 14 cents per share diluted, in the third quarter of 2005.

For the nine months ended September 30, 2006, net income was $2,601,900, or $.43 per share diluted, compared to net income of $2,168,600, or $.34 per share diluted, for the same period last year.

John L. Morgan, Chairman and Chief Executive Officer, stated, “During the third quarter, our franchising business performed very well. Our biggest challenge continues to be growing leased assets in Winmark Capital and Wirth Business Credit.”

                             WINMARK CORPORATION
                      CONDENSED STATEMENTS OF OPERATIONS
                                 (Unaudited)

                             Quarter Ended              Nine Months Ended
                       September 30, September 24, September 30, September 24,
                           2006         2005          2006          2005
    REVENUE:
      Royalties         $4,800,000   $4,230,300  $14,320,500  $12,953,400
      Merchandise sales  1,452,600    1,446,100    3,533,300    5,393,700
      Franchise fees       305,000      330,000      980,700      745,000
      Leasing income       523,100      119,500    1,209,800      273,800
      Other                158,900      163,800      441,900      432,300
        Total revenue    7,239,600    6,289,700   20,486,200   19,798,200

    COST OF MERCHANDISE
     SOLD                1,381,900    1,144,900    3,378,600    4,465,200

    LEASING EXPENSE         84,500          600      131,200          600

    SELLING, GENERAL
     AND ADMINISTRATIVE
     EXPENSES            4,206,300    3,645,700   12,934,600   11,678,100

        Income from
         operations      1,566,900    1,498,500    4,041,800    3,654,300
    LOSS FROM EQUITY
     INVESTMENTS                 -       (5,500)           -     (188,800)
    GAIN ON SALE OF
     INVESTMENTS                 -            -            -       17,400
    INTEREST EXPENSE      (307,900)           -     (429,300)           -
    INTEREST AND OTHER
     INCOME                145,300       90,100      746,600      224,100

        Income before
         income taxes    1,404,300    1,583,100    4,359,100    3,707,000
    PROVISION FOR
     INCOME TAXES         (566,100)    (657,000)  (1,757,200)  (1,538,400)
    NET INCOME            $838,200     $926,100   $2,601,900   $2,168,600
    EARNINGS PER
     SHARE - BASIC            $.15         $.15         $.45         $.36
    WEIGHTED AVERAGE
     SHARES OUTSTANDING
      - BASIC            5,632,042    6,012,463    5,841,047    6,024,700
    EARNINGS PER
     SHARE - DILUTED          $.14         $.14         $.43         $.34
    WEIGHTED AVERAGE
     SHARES OUTSTANDING
     - DILUTED           5,853,968    6,424,990    6,056,690    6,452,359